Two of the world's largest semiconductor foundries are speeding up their plans to produce chips on 300-millimeter wafers.

Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics (UMC) have each moved up plans to open new fabrication plants by several months.

UMC said Thursday that it would begin production on 300-millimeter wafers in its newest fabrication plant, a joint venture with DRAM maker Infineon, in the second quarter of 2003, months earlier than previously planned.

Meanwhile, TSMC will begin construction on two new 300-millimeter fabrication plants in the second half of this year, about six months earlier than previously planned, according to published reports.

The move to the new wafers is considered to be the next big step in semiconductor manufacturing after the transition to 130-nanometer manufacturing processes and the adoption of copper interconnects. The new wafer, which is the basic unit of chip production, has a diameter of 300 millimeters, or 12 inches, compared with current wafers, which are 200 millimeters, or 8 inches. The larger size allows chipmakers to produce about 2.5 times more chips per wafer, increasing production volume. It can also reduce per-chip manufacturing costs by up to 30 percent, some companies have said.

But the shift comes at a difficult time. Most chipmakers, including the foundries, last year scaled back capital expenditures, the money put toward new plants and equipment, as the chip market declined.

Though they cut back in general, most continued to build out their 300-millimeter facilities and buy related manufacturing equipment because of the edge the new wafers would give them when the market turned around.

Even as the foundries are speeding up the move to the larger wafers, several companies have already begun to manufacture chips on them.

Intel shipped its first chips from 300-millimeter wafers last February. At the time, it said chips manufactured with the larger wafer cost 30 percent less to manufacture. By combining the larger wafers with its 130-nanometer manufacturing process, Intel was able to quadruple manufacturing output per wafer, versus its older 180-nanometer chip designs produced on 200-millimeter wafers.

Last month, it announced plans to begin large-scale shipments of chips, such as its Pentium 4, manufactured on 300-millimeter wafers in May.

TSMC's Fab12 began producing chips on 300-millimeter wafers last October. The company said at the time that it expected to finish qualification of products there this quarter.

A joint UMC-Infineon facility had originally planned to begin rolling out equipment in the third quarter of 2003, with production coming after that. Now, the company will move equipment in January 2003, with production beginning in the second quarter of that year.

And on Thursday, ProMOS Technologies, a joint venture between Mosel Vitelic and Infineon to manufacture DRAM chips, revealed plans to build a second 300-millimeter plant, costing about $2.5 billion, according to published reports.

Advanced Micro Devices, Texas Instruments and most of the rest of the world's largest chipmakers also plan to move to the larger wafers. AMD, for instance, has said it will begin to move 300-millimeter wafers in 2005, and recently signed a deal with UMC to build a joint 300-millimeter fabrication plant in Singapore that will open in mid-2005.

This transition and the acceleration of the various factories will help pull the ailing semiconductor manufacturing equipment market out of the doldrums created by capital-spending cutbacks in 2001.

Already, Applied Materials has seen some benefit, posting better-than-expected earnings in its fiscal third quarter in August.

Semiconductor equipment orders have been steadily improving as shown by consistent upward movement of the book-to-bill ratio, which measures orders versus shipments on a monthly basis. That ratio inched up to 0.87 in February, meaning orders of $87 were received for every $100 worth of equipment shipped. The ratio had been at 0.81 in January and 0.78 in December, according to the trade group Semiconductor Equipment and Materials International.

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